Friday, August 01, 2014

The only real solution to a sustained US recovery is for massive
public government investment, that then subsequently creates
income. Investment precedes income creation, it does not
necessarily follow it any longer in a world of 21sts century global
finance capital. Just calling for income growth (via minimum wage
hikes, more contingent job creation, tax cuts, or whatever) will not
necessarily result in US-based investment if Capitalists continue to
shift to more profitable financial speculation offshore; public
investment must therefore occur prior to income growth in order to
generate a sustained recovery.

In today’s world of 21st Century Global Finance Capital, don’t
expect capitalists to invest in real production and thus jobs and
income in the US economy as they did decades ago. They are too busy
making greater profits offshore and in financial asset speculation,
leveraging the trillions of dollars of free money and credit created
for them by the Federal Reserve. If real investment in the US
economy is ever to return, it will have to come via major public
investment initiatives. And if not, expect chronic economic
stagnation to continue, as has been the case since 2010.

Meanwhile, we continue with our military empire, trying to
maintain our supremacy in the world.

Rather than fixing the infrastructure, which the American Society
of Civil Engineers ranks in its annual report card as a D+, the
federal government’s “financing is lavished without stint to
promote every kind of war industry, and foreign investing by U.S.
firms.” As Seymour points out “there is no public ‘space’
for dialogue on how to improve the quality of our lives. Such topics
are subordinate to ‘how to make war.’”

Not only does Empire foreign policy undermine the federal budget,
with 55% of discretionary spending going to the military, but it also
undermines the US economy as jobs are shipped overseas and
corporations hide trillions of dollars in assets overseas to avoid
paying taxes Empire economics does not serve the workers in the US
or abroad and does not serve the security of people as safety nets
are shredded as austerity is needed to fund weapons and war.

The cost of war has escalated. Just one weapons system, the F-35,
a fighter jet that has been grounded because it does not work, has
cost $49 billion per year since the program begin in 2006. Hayes
Brown of Think Progress made a list of what that money could have
been spent on instead. It could have bought a mansion for every
homeless person, fed every school child in the US, funded every
humanitarian crisis or provided global security through the UN or
provided funding to rebuild America.

The last 100 years of Empire and imperialism brought the US great
wealth, creating the largest economy in the world which the IMF
values as $17 trillion or one-quarter of the global economy. Today,
the US economy is struggling with high unemployment, record numbers
of Americans dropping out of the job market, large trade deficits and
declines in many measures of standard of living. At the same time,
other countries, most notably China, India, Brazil and Russia, are
beginning to challenge the US. These countries along with South
Africa joined together to create the BRICS development bank to
challenge the World Bank and IMF, which are dominated by the US and
its western allies. This may be the most important challenge to US
economic dominance since 1945 especially when combined with bilateral
agreements between countries that omit the US dollar, weakening its
position as the reserve currency of the world.

The scenario ends with:

“After
years of swelling deficits fed by incessant warfare in distant lands,
in 2020, as long expected, the U.S. dollar finally loses its special
status as the world's reserve currency. Suddenly, the cost of imports
soars. Unable to pay for swelling deficits by selling now-devalued
Treasury notes abroad, Washington is finally forced to slash its
bloated military budget. Under pressure at home and abroad,
Washington slowly pulls U.S. forces back from hundreds of overseas
bases to a continental perimeter. By now, however, it is far too
late.”

“Counterintuitively, as
their power wanes, empires often plunge into ill-advised military
misadventures. … These operations, irrational even from an imperial
point of view, often yield hemorrhaging expenditures or humiliating
defeats that only accelerate the loss of power.” He points to the
invasion and occupation of Iraq and Afghanistan, with war threatened
in Pakistan.

“Despite the aura of omnipotence most empires project, a look at
their history should remind us that they are fragile organisms. So
delicate is their ecology of power that, when things start to go
truly bad, empires regularly unravel with unholy speed: just a year
for Portugal, two years for the Soviet Union, eight years for France,
11 years for the Ottomans, 17 years for Great Britain, and, in all
likelihood, 22 years for the United States, counting from the crucial
year 2003.” (Note: the year of the invasion and occupation of
Iraq.)

“If, however, we were to dismantle our
empire of military bases and redirect our economy toward productive,
instead of destructive, industries; if we maintained our volunteer
armed forces primarily to defend our own shores (and perhaps to be
used at the behest of the United Nations); if we began to invest in
our infrastructure, education, health care, and savings, then we
might have a chance to reinvent ourselves as a productive, normal
nation.”